Data center rising at ex-steel mill

by Joseph N. DiStefano, Posted: November 18, 2014

Sometime next month, semitrailer flatbed trucks will head north from multinational electrical-equipment maker Schneider Electric's assembly center near Raleigh, N.C. with the first custom-built "KeyBlock" 400-kilowatt modular units to build the planned Keystone NAP data center at the former U.S. Steel Corp. Ben Fairless Works in Falls Township, Bucks County, says Jason Walker, Haddonfield-based director of Schneider's East Coast Data Center Service Provider group.

Schneider is a designer and supplier to Keystone NAP, which says it has raised capital from New York-based DH Capital and a group of "Philadelphia-based investors, led by Ira Lubert," who controls the Independence Capital fund group (clients include Pa.'s pension funds). This form filed with the SEC in January lists Lubert with Keystone NAP chief boss Peter Ritz (ex CEO of Blue Bell-based AirClic), lawyer John Parker (formerly of AirClic and Morgan Lewis) and IT exec Philip Lanctot (ASD Worldwide), together committing $4 million in equity to the project. Lubert told me there is also debt financing.

Ritz tells me the former steel plant is a good location for a data center because it's close to four commerical power plants (Exelon Fairless Hills, which uses Waste Management landfill gas; PSEG Mercer; Dominion Fairless; the Wheelabrator trash cogeneration plants). Sunesys and Comcast lines serve the site; through Sunesys, Keystone NAP users can link to Cogent, Level 3, and telco lines, Ritz says. (Clarified to reflect the Exelon-Waste Management relationship)

"I look at 50 data centers a year, at a minimum," Schneider's Walker told me. "Power is the limiting factor for most data centers. The megawatts available and the diversity of sourcing here are unique. It's a former steel mill, so the structure is nice. It has high level security -- the facility is on (a peninsula). It's equidistant between Philly and New York. It's on the hotbed of East Coast fiber transit."

Walker says the Philadelphia area -- for all its data centers operated by SunGard, Digital Realty, JPMorgan Chase & Co., Tierpoint (which owns the former Phiadelphia Technology Park (Naval Base) and XanD centers) -- "is still an underserved market in terms of available square footage and number of customers." Drug and medical-device makers, colleges and hospitals and law firms are "attractive outsource targets."

What about all those distant data centers Google and Amazon are building in rural Iowa, Utah, Wyoming, New York State, North Carolina? "They're giving tax incentives in places where power's cheap and labor's cheap. But the problem is, that's not the most desirable place where a lot of companies want ot outsource their facilities. Big companies want their data closer. Keystone's vision is to add a lot of advanced services."

Why is this project going ahead when the state-backed plan to build a larger center at the University of Delaware's STAR campus failed? "They were too ambitious," with a large on-site power plant as a major part of the package, Walker told me. "Way too many people had to say 'yes'. Approvals are difficult. In the Northeast, state, municipal and university approvals were viewed as nearly impossible." By contrast, the steel-mill site "is adaptive reuse of an industrial site that's been vacant for, what, 25 years? The state and local governmetns want people in here."

So there'll be construction jobs. How many people does it take to run a data center of as-yet indeterminate size? "They need highly-skilled people, 24/7," said Walker. "The operation will get more complex. They will need more people."